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Luciano Fanti - One of the best experts on this subject based on the ideXlab platform.

  • Interlocking Cross-Ownership in a unionised duopoly: when social welfare benefits from “more collusion”
    Journal of Economics, 2016
    Co-Authors: Luciano Fanti
    Abstract:

    The present study analyses the effects of two-sided Cross-Ownership structures in a Cournot duopoly with firm-specific monopolistic unions. Since such mutual Cross-participations imply a lower degree of competition, the conventional wisdom is that consumer surplus and social welfare, despite the increase in industry profits, are harmed. By contrast, when the labour market is unionised, we show the counterintuitive result that both consumer surplus and social welfare increase with the share of mutual Cross-participation. Interestingly, this occurs not only when unions are wage-aggressive but even if they are fairly “risk-averse”. Therefore, a rather paradoxical conclusion—which may have anti-trust policy implications—is that the interlocking Cross-Ownership ensuring the highest profit (i.e. the “most” collusive mutual Cross-participation) may be socially preferred when there are unions in oligopoly industries. Finally, it is shown that, even though details change, the results also hold qualitatively under differentiated products, price competition and triopoly.

  • Passive unilateral Cross-Ownership and strategic trade policy
    Economics: The Open-Access Open-Assessment E-Journal, 2016
    Co-Authors: Luciano Fanti, Domenico Buccella
    Abstract:

    In a Cournot duopoly model in which exporters compete in a third market, this paper revisits the classical issue (dating back to the pioneering work of Brander and Spencer, Export Share and International Market Share Rivalry, 1985) of the strategic trade policy choice in the presence of the passive participation of one firm in the rival. Passive Cross-Ownership dramatically alters the participating and participated firms' governments' choice to apply the strategic trade policy instrument, the equilibria typology and their efficiency properties. In fact, if the share of Cross-Ownership is sufficiently large, the participated firm's government finds optimal to tax export. Moreover, beyond an adequately high threshold, Cross-Ownership modifies the equilibrium from the activist regime for both countries to an asymmetric regime in which only the participating firm's government intervenes. In addition, in the case of the traditional common activist regime equilibrium, the classical prisoner's dilemma game structure may disappear

  • Social welfare and Cross-Ownership in a vertical industry: When the mode of competition matters for antitrust policy
    Japan and the World Economy, 2016
    Co-Authors: Luciano Fanti
    Abstract:

    tThe paper is motivated by the empirical observations of passive non-controlling partial Ownership amongcompeting firms in vertical markets with imperfect competition. The model encompasses a two-stagegame. For given input prices, two downstream firms compete à la Bertrand in differentiated products. Eachfirm faces a firm-specific input supplier. The two input suppliers set publicly observable and linear inputprices non-cooperatively in the first stage. All technologies have constant returns to scale. The effects ofa one-sided increase in the non-controlling profit participation share of one firm in the other rival firm(i.e. Cross-Ownership) on social welfare are analysed. The main result is that under Bertrand, in contrastwith the common wisdom (which, for instance, holds under Cournot), an increase in Cross-Ownershipcan increase total surplus. The reason is that despite the Cross-Ownership share makes the downstreamquantity choice more “collusive”, hence more socially inefficient, it also reduces input prices, and whenthe competition is in strategic complements and products are not too differentiated the “input price”effect outweighs the “collusive” effect in determining the social welfare outcome. This result suggeststhat antitrust policy in a vertical industry should also consider the mode of competition in the finalproduct market in the case in which “more” collusion is achieved in the downstream sector through anincrease in the one-sided non-controlling profit participation share

  • Partial Cross-Ownership, Cost Asymmetries, and Welfare
    Economics Research International, 2015
    Co-Authors: Luciano Fanti
    Abstract:

    The present study analyses the effects on social welfare of the existence of Cross-participation at Ownership level in a Cournot duopoly. We show that Cross-participation, although it lowers the degree of competition by reducing total output and consumer surplus, may increase social welfare, provided that (i) the firm owned by a single shareholder is less efficient than the other (Cross-participated) firm and (ii) the size of the market is not too large. Therefore, the policy implication is that larger Cross-participations at Ownership level should be favoured, despite their anticompetitive nature, when the Cross-participated firm is relatively more efficient and the extent of the market is not too large.

  • Welfare effects of Cross-Ownership in a unionised duopoly
    ECONOMIA E POLITICA INDUSTRIALE, 2014
    Co-Authors: Luciano Fanti
    Abstract:

    The present study analyses the effects of an increase in the share of one-sided Cross-Ownership in a Cournot duopoly with firm-specific monopolistic unions. Since the Cross-participation at Ownership level implies a lower degree of competition, then in a duopoly without unions, as expected, consumer surplus and social welfare, despite the increase in the industry profits, are reduced when Cross-participation increases. By contrast, when the labour market is unionised, I show the counterintuitive result that, despite the degree of competition is reduced by Cross-Ownership, both consumer surplus and social welfare increase with the share of Cross-participation. This always occurs provided that unions are sufficiently wage-oriented. Moreover, it is shown that the results are also robust to the Bertrand mode of competition. Therefore, the policy implication is that, when wage-interested unions are in existence in oligopoly industries, a rise in Cross-participation - i.e. a lower degree of competition - is socially preferred.

Jiguang Chen - One of the best experts on this subject based on the ideXlab platform.

  • Effect of partial Cross Ownership on supply chain performance
    European Journal of Operational Research, 2017
    Co-Authors: Jiguang Chen, Jing-sheng Song
    Abstract:

    Abstract Partial Cross Ownership (PCO) in a dyad supply chain refers to a situation where each firm holds a portion of its partner’s shares. We study this topic in push and pull supply chains, and prove that neither the supply chain’s nor any member’s profit changes with the percentage of the leader’s shares the follower holds. However, while the profits of the chain and the leader increase with the percentage of the follower’s shares held by the leader, the follower’s profit does not necessarily increase or decrease. As a result, both partners can always achieve a win–win by setting a proper price for transferring the follower’s shares to the leader. Moreover, the equilibrium wholesale price may be greater than the retail price in the push chain, but less than the marginal production cost in the pull chain, contradicting the usual results found in the literature. We also derive a necessary and sufficient condition on the structure of PCO allowing a pull chain to perform better than a push one. This extends Cachon (2004)’s result that a pull chain always performs better than a push one (without PCO). Finally, PCO can coordinate a chain if and only if each one holds half of the other’s shares.

  • Bargaining in a Push Supply Chain System under Partial Cross Ownership
    Applied Mechanics and Materials, 2013
    Co-Authors: Jiguang Chen
    Abstract:

    Supply chain under partial Cross Ownership (PCO) refers to the dyad in which each one holds part of its partners shares. In a two-echelon push supply chain under the partial Cross Ownership, when the operational decisions are bargained, the supply chain is coordinated, and the allocation of the chain profit is dependent on the bargain coefficients and the reserve profits, and independent of the PCO structure: letting the retailer hold part of the suppliers shares doesnt affect the chain efficiency and both players profits. Similarly, letting the supplier hold part of the retailers shares doesnt affect the chain efficiency and both players profits.

  • Performance of a push supply chain under partial Cross Ownership with an effort-contingent demand
    2013 6th International Conference on Information Management Innovation Management and Industrial Engineering, 2013
    Co-Authors: Jiguang Chen
    Abstract:

    Supply chain under partial Cross Ownership (PCO) refers to the dyad in which each one holds part of its partner's shares. In a two-echelon push supply chain under the partial Cross Ownership, when the demand is affected by the retailer's effort, letting the retailer hold part of the supplier's shares doesn't affect the chain efficiency and both players' profits. However, when the demand is affected by the supplier's effort, letting the retailer hold part of the supplier's shares does affect the chain efficiency and both players' profits, and the supplier's profit increases with both its own percentage of shares held by the retailer and the retailer's share held by itself.

Jing-sheng Song - One of the best experts on this subject based on the ideXlab platform.

  • Effect of partial Cross Ownership on supply chain performance
    European Journal of Operational Research, 2017
    Co-Authors: Jiguang Chen, Jing-sheng Song
    Abstract:

    Abstract Partial Cross Ownership (PCO) in a dyad supply chain refers to a situation where each firm holds a portion of its partner’s shares. We study this topic in push and pull supply chains, and prove that neither the supply chain’s nor any member’s profit changes with the percentage of the leader’s shares the follower holds. However, while the profits of the chain and the leader increase with the percentage of the follower’s shares held by the leader, the follower’s profit does not necessarily increase or decrease. As a result, both partners can always achieve a win–win by setting a proper price for transferring the follower’s shares to the leader. Moreover, the equilibrium wholesale price may be greater than the retail price in the push chain, but less than the marginal production cost in the pull chain, contradicting the usual results found in the literature. We also derive a necessary and sufficient condition on the structure of PCO allowing a pull chain to perform better than a push one. This extends Cachon (2004)’s result that a pull chain always performs better than a push one (without PCO). Finally, PCO can coordinate a chain if and only if each one holds half of the other’s shares.

Jason A. Winfree - One of the best experts on this subject based on the ideXlab platform.

  • The Effects of Cross-Ownership and League Policies ACross Sports Leagues Within a City
    Review of Industrial Organization, 2013
    Co-Authors: Kevin Mongeon, Jason A. Winfree
    Abstract:

    Since prior research suggests that some economic competition exists between teams in different sports leagues, economic competition and Ownership structure can affect an owner’s incentive to invest in talent. This paper uses a theoretical model to examine the differences in owners’ incentives to invest in talent when they are operating as monopolists, as duopolists, or as a Cross-owned team. Our model shows that economic competition results in an ambiguous level of investment compared to that of a monopolist. A firm that engages in Cross-Ownership will invest less in talent compared to a duopolist, but the difference in profits is ambiguous. League policies are studied and are shown to affect the quality of teams in other leagues.

  • Cross-Ownership, league policies and player investment aCross sports leagues
    2012
    Co-Authors: Kevin Mongeon, Jason A. Winfree
    Abstract:

    Although many sports leagues are viewed as monopolies, research suggests that some economic competition exists between teams in dierent sports leagues. If fans make consumption choices based on the quality of all teams that are present in their region, then economic competition and Ownership structure can impact an owner's incentive to invest in talent. This article examines dierences between monopolists, duopolists and Cross-Ownership. Consumer preferences and fan loyalty are allowed to vary aCross sports, and the winning percentages of teams in other leagues aects demand. Our model shows that economic competition results in an ambiguous level of investment compared to a monopolist. A rm that engages in Cross-Ownership will invest less in talent compared to a duopolist, but the dierence in prots is ambiguous. League policies are studied and are shown to aect the quality of teams in other leagues.

  • Owners incentives during the 2004–05 National Hockey League lockout
    Applied Economics, 2009
    Co-Authors: Jason A. Winfree
    Abstract:

    This study shows that firm owners can indirectly benefit from work stoppages if they own other firms in substitute industries and gain market power for those other firms. The incentives of the owners are examined with a model of Cross-Ownership cartels and data from professional sports. Assuming that various professional sport events are substitutes, owners may increase profits by eliminating competition, even if they own the competition. This study shows that the recent National Hockey League (NHL) lockout caused a statistically significant increase in attendance for the National Basketball Association and junior hockey leagues. Given that many NHL owners own teams in these substitutable leagues, this could be construed as anti-competitive behaviour and may have prolonged the NHL lockout and helped NHL owners in collective bargaining. Given the public investment in sports facilities and market power in professional sports, this analysis calls for Cross-Ownership aCross professional sports to be questioned.

Lars Hendrik Röller - One of the best experts on this subject based on the ideXlab platform.

  • collusive conduct in duopolies multimarket contact and Cross Ownership in the mobile telephone industry
    The RAND Journal of Economics, 1997
    Co-Authors: Philip M. Parker, Lars Hendrik Röller
    Abstract:

    The deregulation of the telecommunications industry has resulted in a variety of industry structures which have been created in the hope of increasing competition. One example is the licensing of cellular telephone services in the United States. In the face of scarce radio spectrum, the Federal Communications Commission (FCC) has created duopolies in which two firms are granted licenses to compete in strictly defined product and geographic markets. Rate regulation typically imposed for natural monopolies is forgone because it is believed that two firms provide sufficient competition to prevent collusive pricing. We test this assertion using data collected from the cellular telephone industry in the United States. Taking advantage of the unique regulatory environment, we propose a structural model of market power and test to what degree duopolistic competition leads to competitive market outcomes. We find that cellular prices are significantly above competitive, as well as non-cooperative duopoly levels. Substantial welfare gains can be achieved through price reductions. We also find considerable variance in pricing behaviour aCross markets and operators. In a second step we explain the identified conduct in terms of various market and organizational structures that might explain competitive behaviour. We find that Cross-Ownership and multimarket contact are important factors in explaining non-competitive prices. Policy implications are also discussed.

  • collusive conduct in duopolies multi market contact and Cross Ownership in the mobile telephone industry
    1997
    Co-Authors: Philip M. Parker, Lars Hendrik Röller
    Abstract:

    The deregulation of the telecommunications industry has resulted in a variety of industry structures which have been created in hopes of increasing competition. One example is the licensing of cellular telephone services in the United States where the FCC created duopolies in which two firms were granted licenses to compete in strictly defined product and geographic markets. Taking advantage of the unique regulatory environment, we test to what degree duopolistic competition leads to competitive market outcomes. We find that Cross-Ownership and multi-market contact are important factors in explaining non-competitive prices.

  • Collusive conduct in duopolies : multimarket contact and Cross-Ownership in the mobile telephone industry
    The RAND Journal of Economics, 1997
    Co-Authors: Philip M. Parker, Lars Hendrik Röller
    Abstract:

    The deregulation of the telecommunications industry has resulted in a variety of industry structures which have been created in hopes of increasing competition. One example is the licensing of cellular telephone services in the United States where the FCC created duopolies in which two firms were granted licenses to compete in strictly defined product and geographic markets. Taking advantage of the unique regulatory environment, we test to what degree duopolistic competition leads to competitive market outcomes. We find that Cross-Ownership and multimarket contact are important factors in explaining non-competitive prices